Memory prices have surged dramatically, a widely acknowledged reality, but the situation gains added gravity when Apple CEO Tim Cook highlights its impact on consumer markets. During a July 30 earnings call, Cook informed analysts that memory costs for Apple in the September quarter would exceed those in the June quarter, with the increase outpacing the full sequential decline in Apple's adjusted gross margin. Speaking in Cupertino, in what was his last call before John Ternus took over as CEO, Cook described the current memory pricing environment as "a hundred-year flood." This echoes recent warnings from industry players that storage costs are now deeply affecting the smartphone sector.

Broad Impact on Smartphones

Qualcomm (QCOM.US), a leading supplier of smartphone SoCs, was among the first to signal the shift. CEO Cristiano Amon stated in a Wednesday interview that the company is taking concrete steps to expand future profit margins, including a comprehensive chip price hike starting September 1, primarily targeting smartphone manufacturers. "Costs are rising, and prices will continue to rise," Amon said, noting that the company is also seeking to streamline its supply chain. In a press release, Qualcomm emphasized that input costs across the semiconductor industry—including wafer fabrication, assembly, testing, advanced packaging, memory, and other materials—are all increasing. Despite this, the company reported that "revenue remains healthy." Amon observed that dynamic changes in the smartphone market are reducing the competitiveness of mid-to-low-end devices, largely due to price factors, and that even high-end Android phones, where Qualcomm chips dominate, face consumer demand for lower prices. "Due to rising memory prices, consumer preferences in the high-end segment are shifting towards lower-priced flagship models and last year's devices," he added.

Apple's Tim Cook also indicated that memory market prices would continue to rise after September, potentially expanding the impact on Apple's business. When asked by Morgan Stanley's Eric Woodring about whether Apple planned to enter long-term, pre-agreed price contracts with suppliers, Cook addressed the pricing philosophy but avoided specifics on agreements. When questioned about whether Apple's push for procurement flexibility aimed to secure volume or maintain prices, Cook noted that the DRAM market currently has three suppliers, and increasing their number could help ease supply tightness and possibly lower prices. However, he later backtracked, stating that the price impact remains unclear, and that Apple is "evaluating all options."

Counterpoint Research has projected that, due to rising memory costs, global smartphone SoC shipments will decline 15% year-on-year in the first half of 2026. During this period, MediaTek and Qualcomm chip shipments are expected to fall by over 25% each. Meanwhile, Apple, Samsung, Google, and Unisoc are expected to see robust growth. Counterpoint senior analyst Shivani Parashar commented on the SoC market dynamics, noting that Apple's market share is expected to grow by 4% in H1 2026 compared to H1 2025, driven by the strong performance of the iPhone 17 series. In contrast, Qualcomm and MediaTek face share declines, though for different reasons. Qualcomm's high-end market growth is limited, as the Samsung Galaxy S26 series will use both the Snapdragon 8 Elite Gen 5 and Samsung's own Exynos 2600 processor, whereas its predecessor was entirely Qualcomm-powered. Weak sales of the Xiaomi 17 series have further pressured Qualcomm's high-end chip shipments. Meanwhile, MediaTek's low-end and entry-level 5G chipsets are hit by the ongoing memory crisis, though its high-end 9500 series performs well through partnerships with brands like vivo, OPPO, Pocophone, and Redmi. Parashar added that many entry-level smartphone models are migrating to Unisoc's 4G platforms to reduce bill of materials costs, which will help Unisoc grow in H1 2026. Unisoc is also making significant progress in 5G through collaborations with Pocophone and Redmi.

Counterpoint revealed that smartphone memory prices soared over 300% year-on-year in Q2 2026, prompting OEMs to actively sign long-term supply contracts to secure inventory or profit from the shortage and expand market share. Consequently, device cost increases are driven primarily by memory price rises, not hardware specification upgrades.

Storage Manufacturers Continue to Post Stellar Results

While the market grapples with storage costs, manufacturers are enjoying remarkable financial performance. SK Hynix (SKHY.US) reported that for the quarter ending June, revenue surged 257% year-on-year, with operating profit jumping nearly 557%. Sequentially, revenue rose 51% and operating profit 61%. The company attributed this to growing demand from expanding AI infrastructure investments, which drove price increases for high-performance products used in AI servers, setting new records. For the first half of the year, cumulative revenue surpassed 100 trillion Korean won, underscoring robust AI market demand. SK Hynix expects capital expenditure to exceed 40 trillion Korean won this year and plans to build on its recent Nasdaq listing of American Depositary Receipts (ADRs). The company emphasized prioritizing investment in growth while ensuring a solid financial structure and reviewing shareholder return policies. Looking ahead, it plans to maximize production using existing manufacturing hubs in Icheon and Yongin, while boosting NAND flash production and advanced packaging technologies in Cheongju. Josh Gilbert, eToro's Asia-Pacific Senior Analyst, noted that the company's 83% gross margin indicates strong pricing power, a condition that only exists when customers compete for supply, not in a shrinking market.

Samsung also reported stellar results, driven by AI. Its second-quarter operating profit reached 89.49 trillion Korean won ($620 billion), a 19-fold increase year-on-year, marking the highest ever. AI-driven demand for high-bandwidth memory (HBM) pushed prices higher and tightened the chip market. Second-quarter revenue stood at 171.5 trillion Korean won, up 130% year-on-year, with net profit at 71.62 trillion Korean won, soaring 1,299.9% year-on-year. Samsung stated that AI server demand was a key driver for its memory business's record profitability, also boosting sales of DRAM and NAND flash to historic highs. These chips are widely used in devices from smartphones to automotive systems and servers. The company noted that memory capital expenditure increased sequentially, driven by investments in the new Pyeongtaek plant and other infrastructure projects to meet AI demand, while continuing to invest in advanced R&D. Samsung has expanded sales of HBM4 and delivered industry-first HBM4E samples to key customers. HBM4 is Samsung's sixth-generation high-bandwidth memory, designed to power advanced AI processors like Nvidia's Vera Rubin platform. The company observed exponential growth in demand for both general computing and AI, and is closely monitoring the relative demand pace of HBM and server DRAM while maintaining an optimal product mix to support long-term AI demand. Samsung expects industry supply constraints to persist next year and plans to manage its HBM and DRAM business in a balanced manner to align HBM market share with its traditional DRAM business. It anticipates strong server memory demand in the second half, driven by widespread smart AI applications and continued growth in AI infrastructure capital expenditure.

Kioxia Holdings forecasted a 31-fold increase in quarterly net profit, supported by strong demand from AI data centers. The Japanese memory supplier expects net profit for the July-September quarter to reach 1.27 trillion yen ($7.91 billion), up from 406 billion yen a year earlier. For the April-June quarter, Kioxia reported net profit of 842.1 billion yen, a 46-fold increase year-on-year, though slightly below expectations. Operating profit rose 28-fold to 1.27 trillion yen, and revenue grew five-fold to 1.76 trillion yen. The strong performance was driven by rising demand for NAND flash, Kioxia's core product, as US tech companies continue to expand data center capacity. Both prices and shipment volumes increased, with average selling prices in the April-June quarter rising 70% sequentially. Notably, sales to data centers and other enterprise customers in the April-June quarter surged 5.4 times year-on-year to 1.17 trillion yen, roughly equaling the total for the entire fiscal year ending March in just three months. Kioxia stated that NAND flash demand growth, driven by data center needs, will continue this quarter. "We are still in the early stages; I believe the real growth is yet to come," a Kioxia representative said.

Will the Storage Cycle Continue?

Despite stellar performance, investors have not been entirely satisfied. For instance, SK Hynix and Samsung saw their stock prices fall on the day of their earnings releases. However, SK Hynix shares later closed nearly 30% higher, marking its best single-day gain ever, while Samsung shares closed nearly 27% higher, also a record single-day gain. Similarly, Kioxia and Western Digital faced challenges. Kioxia's shares have fallen over 60% from their June 22 all-time high, impacted by a broad sell-off in AI-related stocks and growing skepticism about the sustainability of the current boom. Western Digital, from its June 25 closing high, had dropped 56.49% by July 29, before closing 25.99% higher on July 30. Despite significant gains this year, Western Digital has been among the worst-performing stocks in the S&P 500 this month.

Regarding the future of storage, Samsung believes shortages will persist until 2029. Samsung, SK Hynix, and Micron have all disclosed signing numerous long-term contracts with customers, with Micron even signing similar agreements with automotive manufacturers. However, the historical cyclical nature of the memory industry hangs over these companies like a Damocles' sword. Some analysts argue that this time may be different. The current memory price upcycle has persisted for four years with no signs of demand weakening. AI infrastructure investments are reaching new highs, and the industry is shifting from general-purpose products to a custom era. The rise of applications like cHBM and 3D DRAM stacking is ushering in a distinct new era for storage.

Nomura, in its latest DRAM forecast, has elevated this traditionally cyclical product to a new level. The firm projects DRAM revenue to grow from approximately $800 billion in 2022 to an astonishing over $2.06 trillion by 2030. Their supply-demand outlook shows production increasing from 29.3 billion GB in 2022 to 128.4 billion GB in 2030, with shipments rising from 24.7 billion GB to nearly 126.0 billion GB. Utilization rates remain extremely high, often exceeding 100% in later years, with inventory even turning negative in absolute terms—a clear sign of structural market tightness. The price trajectory is equally dramatic. After a sharp drop to $1.9 per GB in 2023, Nomura expects a strong rebound, forecasting $13.7 per GB in 2026, a peak of nearly $18.6 per GB in 2027, and stabilization around $16-17 per GB by 2030. The combination of higher shipment volumes and sustained high average selling prices is key to the over $2 trillion revenue figure. This is not a normal cyclical recovery. The forecast assumes that AI and data center demand will outpace supply for years. Wafer capacity is growing, but not enough to match the pace of bit demand. High-bandwidth memory (HBM) is the primary driver here, offering higher density, higher prices, and far superior profitability compared to commodity DRAM. For context, most mainstream long-term forecasts still see the overall DRAM market staying below $300-400 billion by 2030. Nomura is essentially suggesting that if AI infrastructure spending continues at its current pace, the market could be 5 to 7 times larger than those conservative estimates. The implications for the three major players—Samsung, SK Hynix, and Micron—are immense. If even part of this prediction comes to pass, memory chips could become one of the largest profit pools in the entire semiconductor industry. The old notion of DRAM as a pure commodity cycle is being fundamentally rewritten by AI.